Danny Aiello was born to a working class family during the Depression. His father having abandoned them, he found it necessary as a child to deliver papers and shine shoes in Grand Central Station. Aiello dropped out of high school, and served in the Army. By his mid-30s, he had been with Greyhound for 10 years, and was elected president of Local 1202 of the Amalgamated Transit Union. He lost his union post after an argument with the union's national office over an unauthorized "wildcat" strike. After that, he said, he did not know what to do: "I had my success, and then I was floundering with nothing."

In 1972 he was working as a bouncer at a night club when one night he filled in as emcee for a comedy competition one night when the regular master of ceremonies didn't show up. He began introducing the performers regularly, and singing occasionally. A friend convinced him to try acting, and although he had never even seen a play, Aiello made his acting debut in Lamppost Reunion, which garnered him a Theatrical World Award for Best Debut.

He worked steadily in theater after that, and made his film debut in 1973's tearjerker for men, Bang the Drum Slowly. He mostly plays Brooklyn born Italian-Americans, in films like Woody Allen's The Purple Rose of Cairo, Cher's Moonstruck, and Spike Lee's Do the Right Thing. He also played the father in Madonna's "Papa Don't Preach" video, which he later regretted, deciding that the song promoted single motherhood.

He continues to play Italian-Americans on film, but in recent years most of his movies have been less-than-classics, including such sludge as Mail Order Bride with Artie Lange and Zeyda and the Hitman with Mercedes Ruehl. His last major success as an actor was the miniseries The Last Don in 1997. In 2004 Aiello realized a dream when he released his first album, I Just Wanted to Hear the Words and began touring as a singer.

During Bill Clinton's presidency, life-long Democrat Aiello became a Republican out of disgust for the behavior of the Commander-in-Chief. "I turned in my card to become a Republican because I did not want to be known as a Democrat under that person's regime. I'm a traditionalist. I have certain values that I live by, and he practices none of those things".

In 2003 Aiello joined a group of New York businessmen who sued the city, stating that it had "sabotaged" their efforts to begin a new film studio on the Staten Island waterfront. The city claimed they had failed to obtain proper permits and insurance, and Aiello's group ultimately lost the lawsuit.